BACKGROUND

• The First meeting of the Malaysia-Turkey Free Trade Agreement (MTFTA) was held in Ankara on 31 May-1 June 2010.

• A total of nine (9) rounds of MTFTA negotiations were held with the final or concluding round held on 13-15 January in Ankara, Turkey. The Agreement later was signed by YB. Dato' Sri Mustapa Mohamed Minister of International Trade and Industry, Malaysia and Hon. Nihat Zeybekci, Minister of Economy of The Republic of Turkey on 17 April 2014 in Ankara, Turkey.

• MTFTA came into force on 1 August 2015.

• Malaysia was able to lock-in tariff preferences that were either on par with, or better than, those previously granted under Turkey’s Generalised System of Preferences (GSP), which were no longer available for Malaysia, beginning 1 January 2014.  As such, with the signing and subsequent entry into force of MTFTA, Malaysian exporters can continue to gain preferential market access into and also remain competitive in the Turkish market.

• The main text of the Agreement can be viewed via MTFTA Agreement

TRADE WITH TURKEY

• In 2016:

  • Malaysia’s trade with Turkey expanded by 50.2% to RM8.42 billion (US$2.02 billion) from RM5.61 billion (US$1.43 billion) in 2015.

  • Total exports of merchandises increased by 89.0% to RM7.17 billion (US$1.72 billion) from RM3.80 billion (US$0.95 billion) in 2015.

  • Total imports of merchandises decreased by 31.2% to RM1.24 billion (US$300.36 million) from RM1.81 billion (US$473.82 million) in 2015.

• Major exports to Turkey in 2016:

  • Palm Oil and Palm-Based Products

  • Manufactures of Metal

  • Textiles, Apparels and Footwear

  • Chemicals and Chemical Products

  • Electrical and Electronic Products 

• Major imports from Turkey in 2016:

  • Textiles, Clothing & Footwear

  • Machinery, Equipment & Parts

  • Chemicals & Chemical Products

  • Petroleum Products

  • Fruits and Other Agricultures

SCOPE

Areas covered under MTFTA include:

1. Initial Provisions

2. General Definitions

3. Trade in Goods

4. Rules of Origin

5. Customs Procedures and Cooperation

6. Sanitary and Phytosanitary Measures

7. Technical Barriers to Trade

8. Trade Remedies

9. Economic and Technical Cooperation

10. Transparency

11. Institutional Provisions

12. Dispute Settlement

13. General Exceptions

14. Final Provisions

TRADE IN GOODS

• The Agreement outlines commitments from both countries on liberalization of trade in goods. Malaysia and Turkey will progressively reduce or eliminate tariffs on substantial number of products traded between both countries.

• The FTA will be realised over a period of 8 years. Turkey will grant preferential market access to Malaysian exports. Turkey will eliminate duties on 85.89% of tariff lines.

Malaysia’s Commitment

• Malaysia's commitment involves tariff reduction/elimination on 98.86% from the total tariff lines based on modalities as follows:

 

Modalities	Description	Tariff lines (HS2007)	%
Fast Track (FT)	Immediate elimination on 1 August 2015	7317	70.38
Normal Track (NT)	Gradually reduced and eliminated on 1 January 2018	1040	10.00
Sensitive Track (ST)	Gradually reduced and eliminated on 1 January 2020	1725	16.59
Highly Sensitive Track (HST)	Gradually reduced and eliminated on 1 January 2023	196	1.89

Turkey’s Commitment

• Turkey will eliminate duties on 85.89% of tariff lines based on modalities as follows:  

 

Modalities	Description	Tariff lines (HS2007)	%
Fast Track (FT)	Immediate elimination on 1 August 2015	8309	68.70
Normal Track (NT)	Gradually reduced and eliminated on 1 January 2018	302	2.50
Sensitive Track (ST)	Gradually reduced and eliminated on 1 January 2020	877	7.25
Highly Sensitive Track (HST)	Gradually reduced and eliminated on 1 January 2023	898	7.43

 

• Upon entry into force of the FTA, Turkey import duties by 30% for palm oil products such as Crude Palm Oil, Processed Palm Oil, Crude Palm Kernel Oil and Processed Palm Kernel Oil. No further reduction will be given for these products. Including palm oil-based products, one off tariff reduction given to 322 tariff lines (2.67%) agricultural and fisheries products. Tariff for another 970 tariff lines (8.02%) will be at locked in at current rate for Malaysia. In essence, only 3.44% of Turkey’s tariff lines are excluded from the Agreement.

• For textiles, Malaysian exporters are given immediate elimination of additional customs duties (ACD) which these safeguard duties are imposed over and above the MFN duties for selected textile products.

• In the case of Malaysia, the elimination of duties by Turkey through MTFTA will compensate for the withdrawal of the GSP benefits previously offered by Turkey until 31 December 2013. Therefore, with the MTFTA, Malaysian exporters can continue to gain market access at preferential duties and remain competitive in exporting to Turkey, offering further advantages to Malaysian exporters.

EXPORT-IMPORT PROCEDURES

Exporting to Turkey

• If you are exporting to Turkey, please click this link to check on the preferential duties under MTFTA:

Turkey - Schedule of Commitment

• Nevertheless, in order for your products to enjoy the preferential duties, the products must first fulfill the Rules of Origin (ROO) criteria under MTFTA.

• Products listed under Turkey’s Exclusion List (EL) do not qualify for duty reduction or elimination under MTFTA. The Turkish importers would need to pay the duty based on the effective MFN rate.

 

Calculation of Preferential Duties Reduction when exporting to Turkey - Turkey’s Schedule of Commitment

Fast Track (FT)	:	Immediate Elimination upon Entry Force of MTFTA Note All tariff lines with FT are already at 0% since 1 August 2015.
Normal Track (NT)	:	Gradually reduced and eliminated on the 4th year from date of MTFTA is implemented Step 1 Starting 1 August 2015, tariff will be gradually reduced and eliminated in four(4) equal annual stages. Step 2 Check the Base Rate or tariff lines with NT Step 3 Once the Base Rate is known: For example, if the Base Rate is 8%, starting from 1 August 2015, each year, the annual reduction % would be: 8%/4 = 2% Starting 1 August 2015, the reduction would be: (1st year) 1 August 2015 : 8%-2%= 6% (2nd year) 1 January 2016 : 6%-2%= 4% (3rd year) 1 January 2017 : 4%-2%= 2% (4th year) 1 January 2018 and onwards: 2%-2%= 0%
Sensitive Track (ST)	:	Gradually reduced and eliminated on the 6th year from date of MTFTA is implemented Step 1 Starting 1 August 2015, tariff will be gradually reduced and eliminated in six (6) equal annual stages. Step 2 Check the Base Rate or tariff lines with ST Step 3 Once the Base Rate is known, for example if the Base Rate is 8%, starting from 1 August 2015, each year, the annual reduction % would be: 8%/6 = 1.33% Starting 1 August 2015, the reduction would be: (1st year) 1 August 2015   : 8%-1.33%= 6.67% (2nd year) 1 January 2016 : 6.67%-1.33%= 5.34% (3rd year) 1 January 2017 : 5.34%-1.33%= 4.01% (4th year) 1 January 2018 : 4.01%-1.33%= 2.68% (5th year) 1 January 2019 : 2.68%-1.33%= 1.35% (6th year) 1 January 2020 : 1.35%-1.33% = 0.02% (0%)
Highly          Sensitive Track (HST)	:	Gradually reduced and eliminated on the 9th year from the date of MTFTA enter into force Step 1 Starting 1 August 2015, tariff will be gradually reduced and eliminated in nine (9) equal annual stages. Step 2 Check the Base Rate or tariff lines with HST Step 3 Once the Base Rate is known, for example if the Base Rate is 8%, starting from 1 August 2015, each year, the reduction would be: 8%/9 = 0.89% Starting 1 August 2015, the reduction would be: (1st year) 1 August 2015   : 8%-0.89%= 7.11% (2nd year) 1 January 2016 : 7.11%-0.89%= 6.22% (3rd year) 1 January 2017 : 6.22%-0.89%= 5.33% (4th year) 1 January 2018 : 5.33%-0.89%= 4.44% (5th year) 1 January 2019 : 4.44%-0.89%= 3.55% (6th year) 1 January 2020 : 3.55%-0.89%= 2.66% (7th year) 1 January 2021 : 2.66%-0.80%= 1.77% (8th year) 1 January 2022 : 1.77%-0.89%= 0.88% (9th year) 1 January 2023 and onwards: 0.88%-0.89%= 0%

 

Importing from Turkey

• If you are importing from Turkey, please click this link to check on the preferential duties under MTFTA:

Malaysia - Schedule of Commitment

• Nevertheless, in order for the product to enjoy the preferential duties, it must fulfill the Rules of Origin (ROO) criteria under MTFTA.

• Products listed under Malaysia’s Exclusion List (EL) do not qualify for duty reduction or elimination under MTFTA. The Malaysian importer would need to pay the duty based on the current MFN rate.

SERVICES

• Services/Investment was not in the Scope of MTFTA that was signed on 17 April 2014 and came into effect on 1 August 2015.

• Based on Article 14.3 (Evolutionary Clause), Malaysia and Turkey may consider negotiating the Services/ Investment Chapter, 1 year after the entry into force of the Agreement.

CONTACT US

For Preferential Certificate of Origin / Rules of Origin related matters, please contact:

1.	Ms. Khalilah Hanum Muhammud
	DL	:	03-6208 4752
	E-mail	:	khalilah.hanum@miti.gov.my

 

2.	Ms. Suharni Mohamed Rosli
	DL	:	03-6208 4715
	E-mail	:	suharni.rosli@miti.gov.my

 

3.	Ms. Nur Aqidatul Atika Muhammad Ghani
	DL	:	03-6208 4746
	E-mail	:	aqidatul.atika@miti.gov.my

 

For other enquiries, please contact the FTA focal point(s) as follows:

Ms. Norazilawati Rohanuddin
DL	:	03-6200 0510
E-mail	:	azi.rohanuddin@miti.gov.my